Wednesday, October 24, 2012 11:13:30 PM
Digital Sales section of the Management Comments
....
In the aggregate, we believe that growth in revenue from new
digital models has the potential to offset physical declines and drive overall future revenue growth. In the digital space, certain costs associated with physical products, such as manufacturing, distribution, inventory and return costs, do not apply. Partially eroding that benefit are increases in mechanical copyright royalties payable to music publishers which apply in the digital space. While there are some digital-specific variable costs and infrastructure investments necessary to produce, market and sell music in digital formats, we believe it is reasonable to expect that digital margins will generally be higher than physical
margins as a result of the elimination of certain costs associated with physical products. ....
Destiny services are the variable costs. I like the trend.
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